DLF Ltd (DLF) Q2 FY23 Earnings Concall Transcript

DLF Ltd  (NSE:DLF) Q2 FY23 Earnings Concall dated Oct. 22, 2022

Corporate Participants:

Ashok Kumar Tyagi — Chief Executive Officer & While-Time Director

Aakash Ohri — Chief Business Officer, Group Executive Director

Vivek Anand — Group Chief Financial Officer

Sriram Khattar — Managing Director, Rental business

Analysts:

Kunal Lakhan — CLSA — Analyst

Saurabh Kumar — JPMorgan — Analyst

Sameer Baisiwala — Morgan Stanley — Analyst

Pritesh Sheth — Motilal Oswal — Analyst

Presentation:

Operator

Ladies and gentlemen, good day and welcome to DLF Limited Q2 FY23 Earnings Conference Call. We have with us on the call Mr. Ashok Kumar Tyagi, CEO DLF Limited; Mr. Vivek Anand, Group CFO; Mr. Sriram Khattar, MD Rental business; Mr. Aakash Ohri, Chief Business Officer and Group Executive Director.

[Operator Instructions]

I now hand the conference over to Mr. Vivek Anand. Thank you and over to you, sir.

Vivek Anand — Group Chief Financial Officer

Thank you and a very good morning and welcome to DLF Limited Quarter Two Financial Year ’23 Earnings Webcast. I know it’s a Saturday morning, so thanks for joining us early-on a Saturday. I would like to start by wishing you and your families a very happy Diwali.

Moving onto the results, we continue to perform consistently across all parameters, in-line with the guidance. I will now first talk about the financial highlights for quarter two financial year ’23, which is the DLF Limited consolidated results. Consolidated revenue stood at INR1,360 crores. Gross margin improved to 60%, driven by superior product mix. EBITDA stood at INR495 crores with margin improving this quarter to 36%. Net profit at INR487 crores, reflecting year-on-year increase of 28%, this was primarily due to higher JV profit and significant reduction in the finance costs.

Housing demand continued to remain buoyant during the period. The luxury segment continues to witness sustained demand with a clear shift towards larger homes. We continued to experience for consolidation across the industry in the backdrop of changing consumer preference towards quality offerings from large and credible players. The interest rate hike was on expected lines. We continued to closely monitor these developments, however, have not experienced any material impact on housing demand so-far. We remain confident that our product offerings will remain the preferred choice for customers and will continue to perform.

Our residential business delivered a steady performance and clocked new sales booking of INR2,052 crores, reflecting a year-on-year growth of 36%. Cumulative new sales booking for first-half financial year ’23 stands at INR4,092 crores, in-line with that guidance. We believe that our well-thought-out strategy of bringing low-rise developments across multiple geographies augurs well in the current market. We launched three new products across multiple price segments and geographies during their previous quarter. The Grove in DLF 5, Gurugram; the Valley Gardens in Panchkula; Garden City Enclave Independent Floor in sector 93 New Gurugram.

All these new launches witnessed encouraging response from the markets, delivering cumulative sales of INR1,315 crores during the quarter. The Camellias, our super luxury offerings has consistently proven to be the preferred choice, sustained momentum of demand for this product led to incremental sales booking of INR473 crores during the quarter. We remain optimistic about the inherent demand in housing, given the changing aspirations of consumers for high-quality, efficient designed products being offered across established ecosystems and continue to work to offer new products across segments and geographies.

Surplus cash generation during the quarter stood at INR409 crores, before net outflow of INR292 crores on account of increased dividend payouts. Deleveraging remains a focus area and consequently our net-debt stood at INR2,142 crores at the end-of-the quarter.

I’ll now move to the financial highlights for quarter two financial year ’23, DLF Cyber City Developers Limited consolidated results. The office portfolio is exhibiting steady recovery with improvement in occupancies. The buoyancy in the retail business continues. Rental income grew 20% year-on year, driven by a strong growth in retail revenue, which grew 54% and office business, which grew 14% during the period. Consolidated revenue of INR1,369 crores, reflecting a 22% year-on year growth. EBITDA stood at INR1,046 crores, year-on-year growth of 21%, net profit at INR355 crores, reflecting year-on-year growth of 54%.

We continue to witness a steady uptick in occupiers’ attendance, currently at 67% across the portfolio, along with gradual recovery in our leasing momentum. Officer occupancy levels have moved up to 89% during the quarter, up by 1 percentage point. The First Phase 1.7 million square feet of our next generation workplace, DLF Downtown, Gurugram has commenced operations and has now started contributing to the rental portfolio. Its unmatched location and our ability to offer an integrated, safe and sustainable ecosystems has once again scripted a success story.

The office area for this asset was completely pre-leased even before commencement of operations. We continue to have a positive outlook towards the office business and hence continue to judiciously put more capital to fuel growth in this business. We have initiated development of an additional office block in DLF Downtown, Gurugram. The development of DLF Downtown, Chennai remains on track.

The retail business continues to exhibit healthy growth. Footfalls and consumption trends exhibited strong momentum. Sales growth has been better compared to pre-COVID levels and we expect similar trends in the near future, given the sustained demand and the upcoming festival season. We remain comfortably poised to deliver our business goals which is well supported by sustained housing demand, quality offerings and a healthy balance sheet.

This completes the results update. Thank you very much. We can now open the floor for Q&A.

Questions and Answers:

Operator

Thank you very much. [Operator Instructions] The first question is from the line of Kunal Lakhan from CLSA. Please go-ahead.

Kunal Lakhan — CLSA — Analyst

Hi, good morning, sir. My first question is on Slide 15. So, since we have launched about 4.5 million square feet in first half and the second half we seem to be launching about 3.1 million square feet. Second half, which usually is a — the stronger period seasonally. So how should we look at this? Like would we look at upfronting some launches from ’23 or beyond period to ’22, to the second-half. Or how should we look at this and, if you can give some commentary on the sales trajectory also in the second half?

Aakash Ohri — Chief Business Officer, Group Executive Director

So, yes, thanks. So, as far as the H2 is concerned, I think what we are doing is, we’re going to be maintaining our guidance as to what we had mentioned to you all. Because what happens in a situation like this is that, what you are seeing right now is already been pre-planned to execute and deliver. And therefore the entire machinery then goes into putting that whole launch together. So we have good visibility and pipelines and launches for Q3 as well as Q4. Q3, you will see a launch, another launch in Panchkula. And Q4 we are preparing for the big high-rise launch, the 63 which we will talk to you after this quarter.

And as far as the trajectory is concerned, I think we are maintaining the strike rate as we had suggested or promised. Over and above that, for us to prepone launches of the next year, I don’t see maybe a reason right now in the most immediate future, but we’ve got things lined-up for, should we require things to happen before. We have the, I’d say, infrastructure to support it and the firepower to kind of execute that. But as of now, I think we are working to our plan and we’d like to maintain that. Thanks.

Kunal Lakhan — CLSA — Analyst

Just a related question on that, Aakash. So, your — on the Phase-V, right, we launched The Grove and we sold it out in a fortnight. How should we look at the subsequent phases coming through in Phase-V? What could be the timeline for, say, your Crest Phase-II or some things on similar lines?

Aakash Ohri — Chief Business Officer, Group Executive Director

Yes, so DLF-V as we call it, for this year, I think we are done with DLF-V’s launches. We will next year, obviously — in one of the quarters we will announce the Crest-II that you are referring to, but at this point of time, I think if you see the spread and how we’ve kind of been — we’ve been working is across geographies, so right now the focus is, going to be Panchkula and then it will move to The Golf Course Extension area. Coming back to DLF-V, we will announce it hopefully after Q2 next year. But we will give that guidance of before the year starts, so you’ll have it much before.

Ashok Kumar Tyagi — Chief Executive Officer & While-Time Director

So, Kunal, just to supplement what Aakash said. I mean, before launching a major high-rise like, be it, The Golf Course Extension road or The Golf Course road, we need three or four quarters of intensive preparation, not only in terms of approval, but also in terms awarding of contracts, finalization of BOQs, beginning of at least the sub-soil construction work and all of those things. So we have been on The Golf Course Extension project for the last two or three quarter and I think now we — hopefully it is curated enough to be — to have a launch in the next quarter and similarly hopefully should see a Phase-V high-rise launch sometime in the later half of next year if all goes well.

Kunal Lakhan — CLSA — Analyst

Sure, sure. My second question was on the collection side. So, last four quarters we have been clocking INR2,000 crore plus of sales consistently. And considering like the new launches that we have done have much shorter monetization period or construction period of 18 months to 24 months, right. So, somewhere like your collection run-rate has to catch-up with sales run-rate. When do you think that will happen when we can reach INR2,000 crores of collection run rate?

Aakash Ohri — Chief Business Officer, Group Executive Director

So most of the collections, as we had even planned within the system are being done as per plan. If you pull out the four quarter’s collection rate also you will see it’s at par with what the planning was earlier. With regard to collections at par with sales, this only happens with the construction schedules and that you call for money based on that. So if you’ve seen — this is a little bit of a, I’d say, a dangerous call to do, because you need to give the customers a little bit of a breathing space before they actually get into the habit of paying. We are most aggressive in our calling, if you’ve seen our payment schedules compared to anybody else in the country, we take a substantial part almost 25% and about most immediately in the first quarter alone.

So therefore, I think that is the rate that we will wound to, but I don’t think calling money more than that right now kind of unnerves the investor and the customer, because everybody is doing their financial planning. Also the banks kind of disburse monies based on how they wanted, and we’ve kept that — the collection — I don’t know, I have Vivek say that, but I don’t think I would like to keep the collection pace more than what it is today. Also because you need to give that comfort factor to the investor.

Vivek Anand — Group Chief Financial Officer

Yes.

Aakash Ohri — Chief Business Officer, Group Executive Director

But I think that’s the pace that we’d be doing but let Vivek answer.

Vivek Anand — Group Chief Financial Officer

Yes. Good morning, Kunal. So. I think on the — first of all on the sales rate of INR2,000 crores, when do you think our collections will catch-up, so first message I want to give is that, that INR2,000 crores of sale includes that one mid term sales, right? And when we look at the collections, we look at the collections, which are without one mid term sales separate. So therefore, the two are not comparable, but let me also answer that how our collections are picking-up and what — how does — I see the collection in the second-half.

So first half collections have grown by 15% over the same-period last year. So, clearly there is a pickup in collections, point number one. Second half, we expect the collections to significantly move-up, right. That’s as per our plan. As the projects which had been bunched I’m getting closer to their end, construction phase end, right? We will be raising demands this quarter and next quarter and hopefully that should get collected within 30 days to 60 days. So we will see collections improving and we are moving up significantly in second-half versus the first. But will it be [Speech Overlap], I don’t see that, right, but, yes, there will be a significant upside in the goods.

Kunal Lakhan — CLSA — Analyst

That’s very helpful. Thank you so much and wish you all a very happy Diwali in case I don’t get a follow-up question, thank you so much.

Operator

Thank you. The. Next question is from the line of Saurabh Kumar from JPMorgan. Please go-ahead.

Saurabh Kumar — JPMorgan — Analyst

Thank you, team. Am I audible?

Vivek Anand — Group Chief Financial Officer

Yes, good morning, Saurabh.

Aakash Ohri — Chief Business Officer, Group Executive Director

Yes, good morning, Saurabh.

Saurabh Kumar — JPMorgan — Analyst

Sir, a few questions. So first is, on your opening comments you mentioned that mortgage rates are not having an impact, but maybe that was the last quarters, we have already seen the rates go to 8.5% and with the rest, this goes to 9.5%. Would you still be confident that demand will not be impacted if rates move to the 9%, 9.5% handle? And also ex of Camellias, how many — how much of your customers would end-up taking mortgages if you can, if you would have a ballpark idea?

Aakash Ohri — Chief Business Officer, Group Executive Director

So, as for mortgages are concerned, Saurabh, that I’ve seen a trend that people are getting into or diluting their mutual fund or other investments to kind — route their moneys back into the new sales, I’ve seen this trend over one year, Saurabh, I’ve been monitoring this closely, also because I work very closely with the banks with our launches. And I’ve seen a certain amount of — let’s say, if I can give you an example of one of the recent launches. The bank mortgages or the call for that was just about maybe 15% so far, compared to what these guys have in-hand or whatever. But to answer your first question, see, it’s an opportunity cost, at that point of time if you actually see what these people are going to be investing in. I’d like to answer it in a different way, what I’m reading over the last two quarters and I don’t think we can completely negate the interest issue, but what I’m seeing is that, we are being — we are the preferred investment category right now.

When I say we, I’m talking about DLF, I’m not talking about the industry right now. So I’m seeing that happen, where people are consciously breaking or moving that other monies towards us. So, whether that in the near-future is going to impact, I don’t think — again, I don’t want to speculate, but what I’m seeing a trend where it’s like a “Ghar Wapsi” for a lot of people coming back the DLF way of investing and everything, because of the commitments that we’ve done over the last, I think two-three years, we have demonstrated that we’ve finished projects, we’ve given people back money should they need it. A DLF investment is almost like a liquid fund today, so even if people were wanting to exit, we never kind of held back, we continue to move on, we demonstrated a lot of strength. So the near — the bank rates have been going up if you see over the last two quarters also. But I think the customers right now thankfully very focused in investing with us. And they are looking-forward to this.

The second thing that I’m also doing is, I’m stepping up on the NRI plan. If you’ve seen our — mostly are NRI investments, our between 12% to, say about, 14%, where it has a potential to double. So therefore you will see an aggressive outreach starting November, where we’ve just had two very successful outreaches in Dubai and Singapore. So I see that particular thing also changing because December onwards — December to February, there are a lot of NRIs who come and visit the country. So, I feel that that is something that we would like to go pitch in advance and then wait for them to make investments, so come and do that. So it’s not only a Camellia centric story, but I’m seeing this across-the-board. And I feel that the customers today prefer to be with us, rather than investing in other asset classes. So I’m seeing this very clearly, Saurabh.

Saurabh Kumar — JPMorgan — Analyst

Got it. Thank you, sir. The second one is, Vivek, on the pricing. So your pricing across projects, we have seen much better than what we would have estimated at the point of launch, The Grove is INR22,000, Camellias is now INR45,000, even your Panchkula is at INR8,400. So should we expect that now with these stable state margins at DLF, maybe one, one and a half years out move to a 40% range to — from 35% odd or do you think a large part of these gains get reinvested back?

Vivek Anand — Group Chief Financial Officer

You’re referring to EBITDA, you’re referring to gross margins?

Saurabh Kumar — JPMorgan — Analyst

EBITDA.

Vivek Anand — Group Chief Financial Officer

EBITDA, so see EBITDA this year also I talked about, Saurabh, that we will be somewhere close to the range of 35%, 36%, and going-forward, next year, I think we’ll surely maintain that percentage and we will surely build-on that.

Saurabh Kumar — JPMorgan — Analyst

But on incremental sales, will it be fair to assume that the margins are higher than 35%.

Vivek Anand — Group Chief Financial Officer

I think it’s a mix, Saurabh, so, yes, we’ll have to really look it as a bucket of new launches, right? In some products, yes, the margins are high, some are low, but on an average, right, we are really making sure that we maintain our margins.

Ashok Kumar Tyagi — Chief Executive Officer & While-Time Director

The second point, Saurabh, which will also drive the EBITDA is, like, to scale-up our business, there has been a upfront investment in costs and lower it, which may, for an INR8,000 crore annualized sales level has a certain EBITDA drag, hopefully at a sales level, which is higher in the following years and the cost levels broadly remain the same, that should also add a couple of percentage points to the EBITDA margins, which then just gets diluted, [Foreign Speech], that we’ve just added costs in anticipation of scaling up and scaling up is happening now.

Vivek Anand — Group Chief Financial Officer

And also just to add the break-up, once these new launches which we did in second half of financial year 2021, once we start issuing possession letters, right, our revenue lines actually grows it, right, that will also help you generate a better margin.

Saurabh Kumar — JPMorgan — Analyst

Got it. And sir, last question is on DCCDL, so this quarter-on-quarter growth we are seeing, that’s the contribution of the new Downtown block, will that be fair or is there any organic element to it as well? And secondly, the Downtown difference was a Cyber Park, there is a 25% differential in rents, what would you attribute it to, because the building quality will be similar, is this just market definition we have seen in Gurgaon or is there anything else to read into that?

Sriram Khattar — Managing Director, Rental business

Yes, hi, saurabh. Your first question on organic versus growth in new assets. Organic growth is definitely there. In retail, we’ve seen a major bounce back compared to the same quarter last year and even compared to the first quarter of the current fiscal. In offices, we are now seeing the rentals getting steady to a marginal growth in the new rentals that we’re doing and therefore, the growth that you see is a combination of organic growth and inorganic growth coming from the new projects, basically Downtown.

On Downtown, the rental increases are there, because the time of completion of II and III Downtown compared to Cyber Park is a gap of three years. So if you just take a normal annual growth, you have about a 15% growth, one. Two, very clearly, post-COVID, the large multinationals are showing the following two or three trends. One trend is that they are definitely moving more quality assets, especially in IT Parks, which give them an opportunity for further expansion and growth over the years. Two, there is no more their requirement for a Grade A property, they are definitely looking at a Grade A++ property. And three, the emphasis is much more on sustainability, well as the social infrastructure, etc., which we have been emphasizing in our office developments for the last five, seven years and these have held us in good state and therefore Downtown, which is now fully leased has renters which are about 23%, 25% higher than Cyber Park.

Vivek Anand — Group Chief Financial Officer

I’ll just add. So, in terms of — Saurabh, your question of in terms of office growth of 14% year-on year. Downtown’s contribution is almost 4% out of 14%. Then we have new leases contributing 5%, right. And contractual escalations around 5%, that’s broadly the breakup of 14%.

Saurabh Kumar — JPMorgan — Analyst

Yes, okay, thank you. Thank you, sir. This is very helpful and Happy Diwali to all of you.

Aakash Ohri — Chief Business Officer, Group Executive Director

Saurabh, one more thing. Camellias is almost touching INR60,000, not INR45,000.

Saurabh Kumar — JPMorgan — Analyst

So, that’s a good Diwali gift for all your investors. Thanks.

Aakash Ohri — Chief Business Officer, Group Executive Director

And to you, and to you, thanks, Happy Diwali.

Operator

Thank you. The next question is from the line of Sameer Baisiwala from Morgan Stanley. Please go-ahead.

Sameer Baisiwala — Morgan Stanley — Analyst

Yes, hi. Thanks and good morning, everyone. The first question is on DCCDL, we’ve got INR19,000 crores plus of debt. So how do you see the interest rate impact over next 12 months to 15 months?

Sriram Khattar — Managing Director, Rental business

This was the question which we answered in the last analyst call also. It is very difficult to accurately forecast where these interest rates will go. There is the market buzzes that the — there will be an increase of 35 basis points to 50 basis points between now and March. But if you take a little conservative estimate, the impact at a PAT level will be between INR50 crores to INR80 crores for the full year.

Ashok Kumar Tyagi — Chief Executive Officer & While-Time Director

Sameer ji, what — I mean, basically and in fact Vivek will then elaborate on this, broadly the repo has gone up by 1.9 percentage points in the last whatever six months, and broadly what the team has been able to do, like by Vivek and the finance team in Cyber City is to restrict the impact on Cyber City to about half of it.

Vivek, you would want to –.

Vivek Anand — Group Chief Financial Officer

Yes, so this 190 basis point increase in repo in the last five months on a gross debt of INR20,000 crores theoretically translates to an impact of close to INR400 crores at a PBT level. But this year what we’ve been able to do is to restrict the impact to a little more than INR100 crores at a PBT level, yes. So, there are series of steps what we’ve really taken in terms of renegotiation, refinancing, which has really helped us.

Sameer Baisiwala — Morgan Stanley — Analyst

Sure, sir. Sir, the question is, how much of this is fixed versus variable and therefore, can we say that, the impact can be 100 basis point, 150 basis point in, say, fiscal ’24, based on your internal workings? And my fear here is that whatever the rental growth that may come, say, INR300 crores, INR400 crores, a lot of that gets digested by this increase in interest cost.

Sriram Khattar — Managing Director, Rental business

So the fixed interest portfolio in this INR1,900 crores is about 15%, 16%. However, now we are starting to work with the banks which give us these rental discounting, which in by their very nature are much more long-term to try and see if we can fix the interest rates for the first two years or two and half years and then they go back to floating. And the treasury teams are working on this. Next year’s impact at a PAT level could be about INR100 crores to about INR150 crores depending upon how we exit this year. And yes, it will have an adverse impact to the PAT compared to the earlier interest regime, but I think this is something which you have to take-in our stride as we go-ahead. We’ve had two very, very good years of interest rates going down and probably we’ll see interest rates at a little elevated level till FY ’24, before they start sort of tapering off again in FY ’25, ’26.

Sameer Baisiwala — Morgan Stanley — Analyst

Sir, that’s very clear and just to make sure, you said 15%, 16% is fixed, so 85% is floating at the moment?

Sriram Khattar — Managing Director, Rental business

Yes, but I would just like to add one thing here when we talk of fixed, we generally have to approach the capital markets for that, whereas the variable of floating-rate is available from the banking system. The banking system is much, much more flushed with funds than the capital markets for fixed rate instruments. And therefore, the banks which have healthy balance sheets now are very competitive in the rates they offer. So therefore, in my personal view, just to compare a fixed versus floating to take a call will be difficult, because of the liquidity position in the banking and in the capital markets.

Sameer Baisiwala — Morgan Stanley — Analyst

Okay sir, very clear. Sir, quick two more questions from my side. One is on the residential site. Sir, clearly the demand momentum has been good, but this is a cyclical industry, what are the one or two key risk factors that you see that can moderate this demand?

Aakash Ohri — Chief Business Officer, Group Executive Director

So with regard to the present demand. I am seeing a lot of business coming in from actual users. And that has completely changed the dynamics, I can tell you today. So I’m not seeing — at this point of time, I’m not seeing — I mean, I’m seeing investors, but I’m seeing them in lesser proportions. So what I feel is that, right now, over the next year at least I’m seeing a lot of pent-up demand, but pent-up in a way that people had been deferring. And now people have come down to — earlier they were living in homes that were rented or even otherwise not to their liking.

But I’m right now seeing a trend where people are actually spending a lot of time, and I’m saying this because, if you see our launches, there were times where during launches people won’t even come to sites, the brokers and intermediaries would run around, fill up forms, get everything done in we are done. But I’m seeing this change because whether it is a Midtown, whether it is a floor in Phase 1 to IV, whether it is DLF-V Grove, whether it is even the new Gurgaon launch that we just did, Garden City Enclave, whether it was the Valley Garden in Panchkula, I’m seeing today that people are not only visiting once, but spending a lot of time contemplating, deciding, looking at their — the orientation and so on and so forth.

So, yes, I understand it’s cyclical, but we’ve just come back after 10 years [Foreign Speech], at least give us some more time, because the resi business, if you’ve seen over the last three years, there has been quite a robust demand, but this is not sort the privilege demand that used to be earlier. So this is not something that can be passed around is what my personal experience has been over these last, I’d say, even six quarters if I can say — say to you earlier, I thought it was just maybe a Camellia story, but then as I traveled, I saw Chennai which was an average ticket size of may be starting at just about INR40 lakh.

So, every customer today, whether a mid level or a high level customer is spending a lot of time, making sure that they are buying something that the like. They can’t be pushed around anymore, it’s not that you got the second floor, so I can shove it down. So, what I’m seeing right now is, I can safely say that I’m seeing a genuine demand right now. So that cyclical nature right now is not something that I’d like to — I’ll keep it in bank of my head right now since you mentioned it, but initially — I mean right now it doesn’t bother me.

Vivek Anand — Group Chief Financial Officer

And if were to add to, Sameer, to your question, I will say possibly, one of the things which we are keeping very close is the interest rates. I think Kunal asked this question earlier. But I think if I really — and that was something we all are at this point in time watching it very, very closely. But if I really look at last three launches we had in the previous quarter, right, these launches were in three different geographies, at three different price points across different segments of our customers. I think we’ve got a very good response. So sometimes it’s difficult to really predict what is working, what is not working.

And if you really see, we are sitting on a repo rate, in fact, the repo rate has now touched 6.9%, faster than what all the banks had projected sometime in April and May. So despite that, we are seeing that the demand stays as strong as it was before. So therefore, yes, while interest could be one big watch out, but I also feel that, all — that all the other fundamental demand drivers continue to play well at this point in time.

Sameer Baisiwala — Morgan Stanley — Analyst

Got it, sir. Thank you very much, and with your permission, one final quick question, your intend to generate free cash flow every quarter, whether small or big, I mean that intent remains, right?

Vivek Anand — Group Chief Financial Officer

Yes, absolutely, that intent remains, yes.

Sameer Baisiwala — Morgan Stanley — Analyst

Okay, great. Thank you, sir.

Operator

Thank you. The next question is a text question. We have lost the question from Mr. Mohit. We’ll move onto the next question which is from the line of Pritesh Sheth from Motilal Oswal. Please go-ahead.

Pritesh Sheth — Motilal Oswal — Analyst

Hi, am I audible?

Operator

Yes, sir, you are, please go-ahead.

Pritesh Sheth — Motilal Oswal — Analyst

Yes, hi. Thanks for taking my question. So, firstly, just — have we all set to launch the last tower in One Midtown this quarter or it’s next quarter?

Aakash Ohri — Chief Business Officer, Group Executive Director

Well, so it’s scheduled for Q1, but we may prepone it to Q4, because right now as Mr. Tyagi was also saying that, a lot of preparation goes towards making the — I mean, working for a new launch, which is a big launch as you know which is in Gurgaon, the high-rise we were talking about. But the collections and the process at Midtown is thankfully quite stable right now. So, right now what we are going to be doing is, because there will be a price increase also with this. And just to give you a quick background of what’s happening in our adjacent property, the Capital Green, which abuts the Midtown, we’ve almost in the Phase III reached a realization — not we, our investors, our customers have almost reached a INR30,000 a square-foot realization, whereas we right now are selling Midtown, the Third Tower C was sold at about INR23,500.

So I feel there is a tremendous amount of opportunity here for everybody who invest there. Whether we want to get in now and realize it or we want to stick to the Q1 plan is something that we’ll — I think we’ll decide in Q4. But at this point of time, I think, again as I say, we’d like to walk through that plan, because we’ve seen this, every time we rush into something, obviously there is something gets left out, but if we can just maintain this strike rate and work to our plan, I think because the entire machinery starts to work pre-launch — pre-approval. First the concept this and that, so just the gestation period for that and within the company, everybody has to align themselves for that particular launch. So, I think the concentration will be here, but should push come to shove and we need to do something there, we will. We are ready for our Q4, we are ready for Q1. Thanks.

Pritesh Sheth — Motilal Oswal — Analyst

Sure, and just a follow-up on residential. So, I think for next quarter, since Grove is fully sold-out, so we already have probably INR1,500 crore of visibility for next quarter, right, in terms of — I mean, I guess that project was around INR1,800 crore and we have booked INR300 crore from that project in this quarter in Q2. So given that we have a strong visibility and there are two big launches that are coming, one next quarter on Panchkula and in Q4 there would be so high-rise. So, shouldn’t — I mean, aren’t you more confident that we can do more than INR8,000 crore of sales and given the visibility we have, we need to update our guidance or you’ll still remain cautious, given the environment and stick to that INR8,000 crore?

Aakash Ohri — Chief Business Officer, Group Executive Director

We’ll remain cautious given the environment, we don’t know how it’s — everything is going to pan-out, you’re seeing what UK is going through and everything else, so — see again, we are right now at this point of time, I’d rather — we all be cautious, because I think that’s the plan we all kind of discussed and set ourselves to do. Yes, if there is opportunity to grab more, you have my assurance that we will leave no stone unturned to do that. But at this point of time, I think the — I’d say, the external environments right now there are too many variables going on, so if we can just keep our head down and continue to at least work to our plan is what I feel that we would like to do.

Mr. Tyagi, can add something if he wants.

Ashok Kumar Tyagi — Chief Executive Officer & While-Time Director

So, I think we internally definitely feel confident that we can complete this INR8,000 crore guidance, but given all the externalities, including the interest rate, I think right not from external standpoint, we’d like to conclude the guidance of INR8,000 crore that we had given, with hopefully an upside risk to it.

Pritesh Sheth — Motilal Oswal — Analyst

Sure, thanks. And one last, in terms of high-rise, we already have one in plan and rest two would be next year, what all are the other high-rises that are already included in our launch pipeline that we have slated? I guess there is one more in Chennai, if I’m not wrong. And any other, let’s say, New Gurgaon that you already have?

Aakash Ohri — Chief Business Officer, Group Executive Director

So, yes, there is Chennai coming, we’re all excited about it, that’s going to be the first luxury development in Chennai, right in the heart of the city, which will be in the lines of Crest, Crest Plus. So, yes, Chennai, we are happy to go back there with this particular product. And there will be something in Gurgaon. Yes, so right now if you’ve seen, even the portfolios are pretty balanced with low-rise and high-rise.

And I think that’s what you will see from us going-forward, because there is thankfully a market for low-rise and there is a market for condominiums, which when we started-off, we want — I mean, there was skepticism all-around, but I think if you’ve seen the results and the acceptance, I think there is now — it’s reasonably established that there are both these markets can work concurrently, so I think that’s what we’ll do.

Pritesh Sheth — Motilal Oswal — Analyst

Sure, very exclusive, but that would be next year, right?

Aakash Ohri — Chief Business Officer, Group Executive Director

Yes, yes, next year.

Pritesh Sheth — Motilal Oswal — Analyst

Okay, thanks. And Happy Diwali to you all.

Aakash Ohri — Chief Business Officer, Group Executive Director

Happy Diwali

Operator

Thank you. The next question is a text question from Abhishek Lodhiya from Yes Securities.

And the question is, if I heard rightly from Vivek sir, that collection of INR1,252 crore doesn’t include numbers from Midtown, then what is the collection run-rate at Midtown and for this quarter? Thanks and Happy Diwali to DLF family.

Vivek Anand — Group Chief Financial Officer

Yes, Abhishek, you heard me correct, the numbers what we report are DLF numbers and we don’t include that the JV numbers when we report the collection numbers. So as of as of September we’ve collected close to INR400 crores in the JV and this quarter our plan is to collect INR450 crores. As the construction commences and as we are raising demand, we will be having a good upside on collections this quarter.

Operator

Thank you. The next question is again a text question from Nimit Gala from Ace Lansdowne Investments.

And the question is, hi team, any update on REIT timelines or is there a change in plan may be due to high interest rate regime and rise in cap rates. I see no mention in the investor presentation?

Ashok Kumar Tyagi — Chief Executive Officer & While-Time Director

So there is no change in the plan or the direction and I think, both GIC and we are reasonably committed to the entire thing. But you are right, given the high interest rate scenario currently going on and the overall uncertainty, frankly, I mean this obviously is not the best time for a new REITs, especially a REIT potentially of our size to come into the market, but we are sort of readying all our firepower to it, hopefully as the market sort of temper and both the shareholders decide, we will bring it to the market, but yes, not in the immediate short-term.

Sriram Khattar — Managing Director, Rental business

So I’ll take the liberty of adding one more point to what Ashok mentioned. See, unlike the race in the capital markets, our race is not because we need the money. And we, or in our planning, had been recently self-sufficient last two, three years and plan to be so in the next two, three odd years, where our business cash flows are adequate to service our debt and still give healthy dividends to the shareholders. The race is only to bring the portfolio in the capital markets and if I am may be a little inwardness, it’s going to be the biggest portfolio and therefore we have to do it carefully and ensure that the investors get the best bang for the buck. So while as Ashok mentioned, our preparation is going on in-full stream, it is not that we are under any pressure to do it soon.

Operator

Thank you. Ladies and gentlemen, this was the last question for today. I now hand the conference over to Mr. Ashok Tyagi for closing comments.

Ashok Kumar Tyagi — Chief Executive Officer & While-Time Director

So, thank you. Once again, apologize for getting all of you out on a Saturday morning. I think this has been a good quarter and clearly I think we are hopefully getting out to a consistent — good cycle across the industry, across all the three segments of the industry, which is residential, offices, and retail. Hopefully to the Cyber City, I think we are hopefully still at the early stages of an up cycle and in the offices business actually emerging from a significant down cycle of the pandemic. So hopefully we still have a few quarters of potentially a good exterior cycle.

As you have seen, the organized players are the ones gaining share in both the residential and the commercial spaces and we see that trend to continue or we continue to stay focused on generating free-cash flows in both the residential and commercial segments, and obviously deploying them in the residential segment on deleveraging, in the commercial segment on capex-ing [Phonetic]. And I think hopefully our strategy which over the last few quarters was still sort of bits and pieces, it’s not coming together and delivering on a consistent basis. And hopefully you’ll continue being on this journey for the future as well. Thank you once again.

Sriram Khattar — Managing Director, Rental business

Thank you and a very Happy Diwali to all of you.

Aakash Ohri — Chief Business Officer, Group Executive Director

Thank you, Happy Diwali.

Vivek Anand — Group Chief Financial Officer

Thank you.

Operator

[Operator Closing Remarks]